Lighting without highly visible shadows
A shadow is merely the absence of light. The sharpness or distinction of a shadow is determined by the area from which the light is emitted. Thus, both increasing the size of a light and/or adding more (spread out) lights will create the appearance of subtle or blurry shadows. Simply put, more light means less shadows.

In practice there are a few ways to achieve that sort of overcast lighting:


Large light source
Multiple lights
Environment lighting


1: Large light source

All lamps (except the Hemi) in Cycles have the option to increase their Size:



The exact size value that works for you will depend entirely on the scale of your scene and how far away the light is. A small lamp (left) will cast harsh shadows, while a large lamp (right) will cast soft shadows:



2: Multiple lights

Similarly, you can add more lights which will increase the total area that is emitting light.

On the left is a single area lamp with Size = 6, and on the right are 5 area lamps (with reduced intensity) arranged like a dome above Suzanne, also with Size = 6:



Using multiple light sources is a little more tricky to control, but creates slightly more interesting shadows. Here is a screenshot of the scene rendered for the right image above:



3. Environment Lighting

Cycles allows you to emit light from the World - an infinitely far away sphere around the scene.

By default, the world colour is a dark grey (left), however if you click Use Nodes, change it to white, increase the strength and add some buildings just out of view to block some light, it can be used quite effectively (right):



Here is a screenshot of the scene rendered for the right image above: